Overfunding a Whole Life Insurance Policy

Overfunding a whole life insurance policy delivers worse returns than maxing out a 401(k) or IRA. The high commissions eat 50-100% of first-year premiums, and the cash value growth typically lags behind a diversified index fund by 3-5 percentage points annually. Surrender charges further erode gains if you need liquidity in the first 10 years. This strategy outperforms no other option on this list, ranking dead last in terms of net cost efficiency.